Seniors Flock To Star-Rated Medicare Plans Under ACA Rollout

An effort under the Affordable Care Act to encourage the health insurance industry to provide higher quality benefits to seniors is rewarding Medicare beneficiaries and the bottom lines of health plans that are achieving high government-backed ratings.

More than half of seniors enrolled in so-called Medicare Advantage plans are now enrolled in plans with ratings of four stars or more on a five-star scale, a ranking system created under the health law to guide seniors to cost-effective and higher quality benefits. Plans are rated on such measures like cutting call waiting times as well as how well they encourage preventive care such as getting regular blood tests for diabetes.

A rating of four is considered above average and a rating of five is excellent and the highest rankings give health plans a bonus payment and the ability of the insurers to tout their improvement. There are now 53 percent of Medicare Advantage enrollees in plans with four or more stars compared to just 24 percent in 2011, according to the Centers for Medicare & Medicaid Services.

Some plans are performing better than others with Kaiser Permanente among those best known for its high scores and four and five star ratings. A five-star rating allows the insurers to market year-round rather than just during the fall open enrollment period.

But other plans are beginning to tout their four-star or better ratings to Wall Street, saying it has helped them enroll more seniors and take customers away from rivals.

Take
Aetna (AET), for example, which added more than 130,000 new members to its Medicare Advantage plans, executives said during its first-quarter earnings call last month. Aetna and its Coventry subsidiary combined to earn four or more stars for 17 of its Medicare Advantage contracts this year compared to 12 contracts in 2013.

“Our continued momentum speaks to the popularity of the Medicare Advantage program and the value we provide relative to traditional fee for service Medicare,” Aetna chief executive officer Mark Bertolini told Wall Street analysts and investors. “This value is demonstrated by our STARS performance where we have a higher percentage of members in 4-STAR or greater plans than any of our national managed care peers. We continue to invest in our Medicare Advantage business and project that our STARS performance will improve in 2015, further enhancing our value proposition.”

Nearly one-third of the nation’s Medicare beneficiaries are enrolled in private plans, which are an effort to move away from the traditional fee-for-service program. Most major carriers such as
Humana (HUM),
Cigna (CI), UnitedHealth Group (UNH) and an increasing number of Blue Cross and Blue Shield plans sell Medicare Advantage plans, which also provide extra benefits and services to seniors such as disease management, nurse help hotlines as well as some plans providing vision and dental care and wellness programs.

“The Affordable Care Act helps strengthen Medicare Advantage by providing improved benefits and keeping costs low for Medicare beneficiaries,” the Centers for Medicare and Medicaid Services said in a statement to Forbes. “We believe that plans will continue their strong participation in the Medicare Advantage program in 2015 and beneficiaries will continue to have a wide array of high quality, high value, low cost options available to them while at the same time we are making certain that plans are providing value to Medicare and taxpayers.”

I've written about health care for three decades, starting from my native Iowa where I covered the presidential campaign bus rides of Bill and Hillary Clinton through the Hawkeye state talking health reform and the economy. I have covered the rise, fall and rise again of he...